Ethiopia: Harnessing Agricultural Quality to Enhance Export Revenue

Ethiopian Coffee

Agriculture remains the leading sector in Ethiopia's economy and an important source of economic growth. It contributes 39 percent of the country's Gross Domestic Product (GDP) and provides employment opportunities for about 73 percent of the population.

The sector has also the lion's share in Ethiopia's export performance by contributing 77.5 percent of the country's foreign currency earnings during the past 11 months of the current fiscal year followed by manufacturing and mining with an aggregate share of 21.4 percent.

As it is known, the government of Ethiopia has been giving due emphasis to enhance the product and productivity of the agriculture sector by formulating a strategy known as Agricultural Development-Led Industrialization (ADLI) in 1992 to create a conducive environment for growth in the sector.

Under the ADLI, Ethiopia has set successive five-year plans that evidently successful in enabling the country to register an average 7 percent agricultural growth during the past 11 years and; significantly improved agricultural exports.

While coffee extends its dominance in Ethiopia's export revenue by generating over 722.4 million USD during the 2015/16 fiscal year, oil seeds and chat remain the second and fourth hard currency earning commodities with 472.6 and 262.4 million USD respectively.

Despite this success and their pivotal role for Ethiopia's export, the performance of agriculture commodities remained largely fluctuating that led to irregularity of earnings over years.

Sources indicated that the revenue obtained from commodities under the supervision of the Ministry of Trade during the past 11 months has shown a 4 four percent decline compared to a revenue gained in last year same period.

The amount of revenue Ethiopia has been expecting to earn from export of coffee, sesame and other major exportable items has also been inconsistent due to inability to meet the international quality standards.

Experts in the field stated that even though Ethiopia's too much dependence on few exportable items coupled with a negative impact El Niño induced drought could be contributing factors, to the failure to meet the international quality standard is the major cause for this export glitch.

The experts stated lack of appropriate and modern technology in agriculture value chain is the major hindrance in the export quality. Furthermore, poor handling, packaging and storage techniques as well as inefficient infrastructural connectivity also play a negative role in hampering the competitiveness of Ethiopia's agricultural commodities in the global market.

The aforementioned problems also believed to reduce the price of Ethiopia's coffee in the world market from those coming from Brazil and Vietnam.

Recognizing the problem, the government has taken measures including conducting commodity quality and safety inspection tests that have aimed at improving quality of exportable agricultural commodities.

Consultations had also been held with farmers' cooperatives of the oil seed and cereal growing States and technical support have been given to stakeholders in the agriculture value chain.

Besides, active follow up mechanisms were also set with State governments to enhance the capacity of smallholder farmers who are accountable for the majority of Ethiopia's agricultural export.

In this regard, Ministry of Trade has played a pivotal role in deploying its staffs paid a field visit to various States with the aim of bolstering the market chain among farmers, cooperatives and Ethiopian Commodity Exchange /ECX/. The visits bore fruit to identify quality related problems in the agricultural value chain and to provide the necessary solutions.

ECX's decision to expand its warehouses in oil seed and cereal growing states is also believed to significantly reduce poor storage facilities caused quality problem.

Experts called on due attention to be given to improve agricultural commodities quality so as to enable the country remain a strong competitor in the world agricultural market and to get a reliable destination for its exports.

Enhancing quality of agricultural commodities would also have a role to increase the benefit Ethiopia could get from the sector.

Bearing the stated facts in mind, the government should further extend its engagement to enable smallholder farmers to have access to appropriate and modern farming technologies either individually or under farmers' cooperatives.

Improving storage facilities and enhancing the transport system would also be essential to a timely delivery of exportable items particularly for cut flowers, meat and vegetables while satisfying the international quality standards.

Though commendable results gained in branding coffee products more has to be done to brand additional coffee and sesame produces grown in various parts of the country to attain more foreign currency.

Capacity building trainings should be offered to smallholder farmers and model plots need to be prepared to introduce farmers with modern farming technologies and build their understanding in practical way.

Furthermore, development agents have huge responsibility to train smallholder farmers and teach them the link between improving quality with increasing the amount of money they put in their pockets.